MUMBAI: The Delhi High Court reserved judgement in the Tata-NTT Docomo case after the Reserve Bank of India (RBI) reiterated its objection to a pact aimed at resolving a two-year-old dispute over the Japanese company’s exit from their telecom joint venture and the enforcement of a $1.17 billion arbitral award by an international court.
The RBI did not address the court’s question on its jurisdiction over the international arbitration award even after it was asked to do so a day earlier, said a lawyer present in court on Wednesday.
Justice S Muralidhar will decide whether the RBI’s intervention application opposing the award as well as the settlement between Tata and Docomo were maintainable. The judgement could be expected in about a week, said lawyers. The ruling would likely bring the long and arduously fought dispute to an end, unless it is challenged in the Supreme Court.
“The judge didn’t seem very appreciative of the RBI’s argument and commented that the two relevant parties are now in agreement,” one of the lawyers said.
The RBI on March 8 had opposed the pact between the Tata Group and Docomo aimed at resolving the dispute. At the hearing last Wednesday, the RBI contested the payment to Docomo, which would have followed the enforcement of the award, arguing that it amounted to a transfer of shares and was illegal, dealing a setback to the efforts of both companies to resolve the dispute that has clouded Indo-Japanese ties.
Docomo acquired a 26.5% stake in Tata Teleservices for about Rs 12,740 crore in November 2009 and the partners agreed that the Japanese company would be paid at least 50% of the acquisition price if it exited the venture within five years. When Docomo decided to get out in 2014, Tata Sons was unable to find a buyer for the Japanese company’s stake and offered to buy it for half the investment of $2.2 billion.
India’s central bank blocked the Tata Sons’ offer, saying foreign investors could not sell stakes in Indian companies at pre-determined prices. Docomo approached a London tribunal in January 2015, which asked the Tata Group last June to pay $1.17 billion for not abiding by the agreement.
Docomo then moved the Delhi High Court to enforce the award. On Tuesday, the central bank wanted to take a fresh look at Tata Sons’ “request for approval” to pay Docomo the arbitral award. The Delhi High Court instead asked the RBI counsel to show the rules that allowed the central bank to oppose an international award.